California high-speed rail secures $1 billion annual funding

California’s high-speed rail project has won a financial lifeline, with the state committing $1 billion annually from cap-and-trade revenues through 2045.

The steady funding agreement, formalized under new legislation signed this week, gives the California High-Speed Rail Authority the long-term stability it says is essential to completing the project’s initial Merced-to-Bakersfield segment by 2033.

Why It Matters

California’s high-speed rail is in an awkward position. Years of delays and an inflated budget have damaged public and political faith in the project, but the past few years have seen progress—with construction happening throughout the state and tracklaying set to begin later this year. To call off the project now, as many of its detractors in the White House desire, would waste years of advancement.

That has not stopped Trump, a long-standing critic of the project, from regularly threatening to take away the federal funding that has been vital to the project’s progress so far—a threat he and Transportation Secretary Sean Duffy carried out in July.

What To Know

The annual $1 billion allocation comes from California’s cap-and-invest program, which collects fees from polluting industries.

Governor Gavin Newsom‘s administration has endorsed the move, proposing to earmark a significant portion of those revenues to ensure construction continues even as federal support has been withdrawn.

The new legislation extends the state’s cap-and-invest program from its previous 2030 expiration to 2045, while also establishing a continuous appropriation of $1 billion per year to the California High-Speed Rail Authority through 2045.

The authority said the sustained funding would fill the current gap in its business plan and provide a critical match for future federal grant opportunities. It also enables the agency to pursue private-sector partnerships and begin work on trainset procurement and early operations planning.

The $1 billion-per-year allocation is set to run through 2045 and closes a projected funding gap in the Central Valley portion of the rail line. This section has been prioritized because of a legal obligation. Its viability had been in question without additional funding sources.

Though the full system was initially expected to cost $33 billion, current estimates for the statewide network exceeded $135 billion.

California’s cap-and-invest program generates billions through emissions credit auctions. The program is set to expire in 2030, and lawmakers are expected to extend it through at least 2045 to sustain rail financing. Legislation to that effect is under consideration in Sacramento.

What People Are Saying

California High-Speed Rail Authority CEO Ian Choudri said in a statement: “I am grateful to Governor Newsom, our legislative leaders, and allies across the state and the nation—including those in the labor community—whose partnership and resolve helped make this possible. Today’s agreement has made a big, bold statement about California’s future—one that will create jobs, cut pollution, and connect and transform communities across the state.”

What Happens Next

Construction continues on the 170-mile stretch between Merced and Bakersfield, with 70 miles of track bed and over 50 bridges already completed. Tracklaying is expected to begin later this year.